UBS faces huge fine over Libor

Swiss bank UBS is poised to be hit with a one billion US dollar (£620 million) fine to settle allegations it rigged the Libor rate, as early as Monday.

Published: 10:12, Fri, December 14, 2012

Swiss bank UBS is reportedly in last-minute negotiations with authorities around the world over the [PA]

The Zurich-based bank, which has around 6,500 staff in London, is in last-minute negotiations with authorities around the world, the Financial Times said.

A one billion US dollar fine would more than double the 450 million US dollars (£290 million) paid by Barclays for its Libor settlement over the summer.

The fine would cap a turbulent year for UBS, which saw rogue trader Kweku Adoboli jailed and it suffer a £233 million loss on the botched Facebook stock market flotation.

The circumstances led to the bank's decision to shrink its investment banking arm, which will include the loss of 10,000 roles worldwide. The bank plans to reduce its headcount from 64,000 to 54,000 by 2015, with some 75% of the losses made outside Switzerland.

The Financial Services Authority (FSA), US Department of Justice, US Commodity Futures Trading Commission and Finma, UBS's main Swiss supervisor, are understood to be the authorities drawing up the settlement with the bank.

Libor is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars of contracts from mortgages to the cost of corporate lending.

The probe, which has embroiled about 20 financial institutions, has accelerated with the first arrests by the Serious Fraud Office taking place this week in the UK.

Three British nationals - aged 33, 41 and 47 - were taken to a London police station following searches at a property in Surrey and two premises in Essex.

Taxpayer-backed Royal Bank of Scotland has previously said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.